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Spain PMI May 2020

Spain: Composite PMI emerges from record low but remains deep in contractionary territory in May

Reflecting weaker contractions of both the manufacturing and services sectors after they had collapsed in April, the IHS Markit composite Purchasing Managers’ Index (PMI) jumped to 29.2 in May from an unprecedented 9.2 in April. Despite the climb, the index remained deep below the 50-threshold, indicating a marked retreat in business activity.

The IHS Markit Services PMI bounced back from its record-breaking 7.1 in April to 27.9 in May; however, it indicated a still marked deterioration in service sector activity. The improvement was mainly driven by softer declines in activity, new business and employment as some businesses started to reopen amid the gradual easing of lockdown measures that were enacted to curb the spread of Covid-19. Nevertheless, activity remained extremely weak and new business continued to fall at a steep rate, while jobs were lost for the third month running. Regarding prices, operating costs fell again, which, amid a discouraging business environment, encouraged firms to cut output charges. Lastly, business confidence jumped, but remained pessimistic amid a bleak outlook for activity.

Similarly, the IHS Markit Manufacturing PMI rose to 38.3 in May from 30.8 in April, which had marked an over decade low. Nevertheless, it still signaled a marked deterioration in operating conditions. Weaker drops in output, new orders, exports and employment drove the upturn. Considerable limits on operating capacity and subdued demand, however, continued to weigh heavily on activity. Pessimism among manufacturers remained stark, though less so than in April, on concerns over the pandemic’s longer-term impact on demand and revenues. On the price front, deflationary pressures persisted for the second successive month, as both input and selling prices declined markedly.

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